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CCA developing "perfect" lien act

Development of a "perfect" lien act for construction took some significant steps at the Canadian Construction Association's (CCA) recent 96th annual conference.

The CCA’s general contractors council passed a motion to ask the association’s standard practices committee to develop a model set of lien legislation based on the best provisions for each subject.

“CCA can compile the components of a dream lien legislation and go back to the provinces and present some material forward,” suggested John Bockstael, president and chief executive officer of Bockstael Construction Limited based in Winnipeg, during the council’s recent meeting.

The meeting featured a presentation by manufacturers, suppliers and services council representative Yvan Houle, who showed the council a matrix comparing various provincial lien legislation.

“When talking about lien legislation, each jurisdiction has to a large degree its own requirements. Some of those requirements are driven by local choices... some of them are driven by legal regimes that exist in Canada,” he explained.

The presentation grew out of a discussion at the vertical building forum at the May 2013 board meeting in Kelowna, B.C.

The discussion centred around holdbacks across various Canadian jurisdictions and the need for more information on the subject.

The first step, according to Houle, was collecting the information on each jurisdiction and the next step will be to develop a model that the CCA can promote throughout the country and lobby with respect to best practices.

To a large degree, there is a lot of commonality across jurisdictions in the sense that contractors, sub-contractors and suppliers are a target to a lien, said Houle.

Some jurisdictions exclude or include the design community.

“In Manitoba, architects and engineers are expressly excluded...whereas in Quebec, they are expressly included as a target to a lien,” he noted in his presentation.

He added that a more uniform model should be more inclusive as opposed to exclusive.

Typically, as a principle, public properties owned by the Crown are excluded from the lien act legislation across all provinces, including Quebec.

Although, some Crown land such as airports, are subject to liens.

A holdback provision was also common across all provinces.

The percentage is typically 10 per cent, though there are variations.

“In New Brunswick the percentage varies depending on the value of the project... In Quebec there’s no percentage (requirement),” Houle said.

“What’s happened in Quebec is a practice has been developed, where people (use) 10 per cent holdback, when in fact, under the Civil Code, there is absolutely no requirement that it be 10 per cent.”

All jurisdictions also have a holdback retention period, typically 45 days, though it can vary between 30 days (Newfoundland) and 60 days (Prince Edward Island).

General contractor council members discussed the various highlights from each jurisdiction and the possibility of a more uniform system across the country.

Geza Banfai of McMillan LLP cautioned the council to be careful what you wish for.

“It would be nice to have a model lien law for application throughout Canada, but what I fear is that when you start to get to the fine points of it, we may find ourselves bogged down in a lot of controversy,” he said.

“There are differences in local practice which, I think, account for differences in, for example, holdback percentages across the country, there are variations. Things are done differently in Alberta than in P.E.I.”

The CCA’s standard practices committee will now take an in-depth look at the issue.